Chris Doss The Russia Journal ----------------------------
Hello, my friends, respected speakers of the chambers of the federal assembly, respected deputies of the State Duma, members of the Federation Council.
We have once more gathered in this hall in order to sum up the results of the year, and set out the objectives for the coming period.
Our aims remain the same: to develop democracy in Russia; to establish a civilized market and a law-based state; and most importantly, to raise the standard of living of our people.
Russian people looking to the future with more confidence
We have made some achievements here, albeit small ones. Last year, economic growth continued and we succeeded in creating new jobs. Unemployment fell by 700,000. Real incomes rose by almost 6 per cent.
A year ago we set ourselves a modest but extremely important task: to at last bring the average pension in our country above the subsistence level for pensioners. Today we can say that we have completed this task. People look to tomorrow with more certainty. Many are starting to make long-term plans for their lives, trying to get an education and new professions, and it is clearly no accident that last year was a record for Russia in terms of the number of students.
Following an entire era of deficit budgets, when we spent more that we earned, for the second year in a row, the budget has shown a surplus.
We have made progress on developing a market infrastructure, on strengthening guarantees for private property, mainly through improvements to the body of legislation.
I would note the passing of the land and labour codes, the package of pension and judicial reforms, the debureaucratization of the economy and the improvement of the taxation system. Sections which are important to people have appeared in the Civil Code, such as the section on inheritance. And today, I would like to thank the Federal Assembly and the Russian government, who have collaborated constructively throughout this intensive period, and were very often effective partners.
Business climate improving
Against the backdrop of increasing political stability, the business climate in the country is constantly improving. The horizons of state and corporate planning have pushed forward. Entrepreneurs are now building their plans based not on months, but on years. We are servicing our foreign debt on time, and sometimes even ahead of time. The total capitalization of Russian companies has more than doubled. Exports of non-raw materials have started to grow. Over the course of the year, deliveries of cars and equipment abroad have risen by a quarter. After a 10-year break, we have resumed second place in the world in terms of volume of oil output, and first place in terms of energy trade. And we need to manage the country's position in the world for ourselves.
All of this is gradually changing attitudes to us in the world as well. The improvement in our economic situation has been noted by international ratings agencies, who have pushed up Russia's credit rating. Foreign banks are increasing Russian shares in their investment portfolios. Our country is gradually turning into a solid and predictable business partner. However, we also need to admit something else: political stability and the favourable economic climate have not been used in full for a qualitative improvement in the lives of the country's citizens and for Russia to win a worthy place in the world economic system.
Are we satified with what has been achieved? Our answer, of course, is no and again no. There are no reasons whatsoever for us to be dizzy with success. Russia's economic problems, which have been piling up in the course of previous decades, decades of stagnation and crises, have not dissapeared. Poverty, even though it has receded, just receded, still continues to torture nearly 40 million of our citizens.
In terms of economic growth in recent years we have only managed not to fall further behind other countries. In this connection I have to say that for a fairly long time many politicians and citizens of the country were convinced or were living with the illusions that the end of the period of military and political confrontation in the world would almost automatically open up a road to Russia for the world economic system, that it would throw wide open its economic embrace.
Life has turned out to be far more complicated. Yes, the period of confrontation has ended. With all the states in the world we are building - I wish to stress this, with all states of the world - constructive, normal relations.
However, I wish to draw attention to another thing: norms in the international community, norms in the modern world, also mean harsh competition - for markets, for investment, for political and economic influence. And in the struggle - in this struggle - Russia has to be strong and competititve.
Countries throughout the world now compete with one another in all areas of the economy and politics, in terms of the taxation burden, the level of security of the country and its citizens, in terms of the guarantees for protection of ownership rights. They compete in terms of the attractiveness of the business climate, the development of economic freedoms, in terms of the quality of the institutions of the state and the effectiveness of the judicial and legal system.
Competition has now assumed a genuinely global character. Owing to our weaknesses we have had to yield to others our numerous niches in the world markets, eagerly to be snapped up by others there and then. No one is willing simply to return them to us and nor will anyone give them back, as the situation in the oil, steel and air transport markets and those of other goods and services testifies.
The conclusion is obvious: no one aims to be at loggerheads with anyone else in the world today. No one wants it and no one needs it.
However, no one is waiting specifically for us and nor will anyone make a special effort to come to our assistance. It is we ourselves who need to fight for our own place in the economic sunlight.
Russia needs to aim for higher rate of growth
I have already said that Russia now needs more ambitious goals, a higher rate of development. Our economic policy, the day-to-day work of our institutions of state must be geared towards solving relevant tasks.
Moreover, these actions, this policy, should be understandable. They should be understood and supported by the people. I am convinced that in order to safeguard a dignified standard of life for our citizens and for Russia to remain a significant and fully-fledged member of the world community and for her to be a strong competitor, our economy must grow at a much faster rate, for otherwise we shall lose all the time, whilst our opportunities in the politics and economy of the world will shrink.
Is Russia ready for such a competitive struggle? Is she capable of ensuring the necessary growth rates for this? In its forecast for the next few years the government has set this rate at between 3.5 and 4.6 percent. What does this tell us?
In the first place, it represents a de facto admission that the propitious foreign economic conditions no longer ensure the necessary rate of economic development and its competitiveness.
And the second thing: the government is not reckoning on higher rates of growth.
Such a low assessment of Russia's capabilities doesn't help the cause. Moreover, it doesn't imply active policies, and doesn't envisage measures designed to make use of the capabilities of the Russian economy. I am talking first and foremost of the potential we have in enterprise, in the scientific and technical sphere, and in modern management technologies. I consider that the main thing now is to create conditions in which the citizens of Russia can earn money, earn it and, whilst deriving advantage for themselves, invest it in the economy of their own country. But to achieve this, it is essential to eliminate those things which still hamper people's life and work. Above all, we must substantially change the actual system by which state institutions operate. At the moment, the country's colossal potential is being blocked by a cumbersome, infelxible and ineffective state apparatus. For example, of almost 500,000 appeals made during my television interview [at the end of 2001], almost three-quarters were citizens' complaints against various forms of arbitrary administrative behaviour.